Coming out … of the Financial Closet

I’m really pleased to feature Kay’s story this week. She writes at Life Style Voices, and her style is so quirky and disarming, it just makes me happy. This post marks a brave move on Kay’s part. She’s opening up about her story of debt and financial distress for the first time. I’m incredibly honoured to host Kay’s exit from the closet.

Felicitations Fellow Frugal Followers!

This post is a promise fulfilled.

Months ago I commented in one of Prudence’s posts. Her post was titled:

And it was FABULOUS, as always. In it she included a disagreement she was having with her husband “DH” about expenditures for her mother’s 90th birthday celebrations. Did the event represent “want” spending or “need” spending? You’ll have to go back and read it so that the following comments make some sense, but here they are, copied and pasted for your viewing pleasure:

Grandma celebration? I’d have to say that’s a “need”. My mom’s 87. They won’t be around forever. If they were closer to 70, maybe we could give this one to DH. As far as money goes, I haven’t shared much about Jay and my financial adventures, mostly out of fear of being driven out of the blogosphere. I may in the future, but only after I’m assured that no one has a stash of tar and feathers. We did everything wrong. Then we’d think we learned. Then we’d do everything wrong again. We seem to be on a pretty even keel right now, but we have a tendency to throw the deck of cards up in the air and have to pick them all up again. Unfortunately, 1 or 2 will end up under the couch and we don’t notice until the next time we play (all figuratively speaking, of course). Love this series, Prudence! It’s really thought provoking.

Thank you, Kay. I actually said to DH as we were discussing the 90th birthday disagreement this morning, “Kay from Lifestyle Voices agrees with me. She says . . . ” In the end, we agreed that all expenses from Saturday (present, food for party, decorations) will come from our shared accounts, and only the brunch from today (Sunday) would come from our respective discretionary accounts. I’m happy with that compromise : ) I’m interested in what you have to say about your history with money management. My prediction is that by blogging about it, you’ll keep your awareness so high that you won’t be as likely to slip this time around. Looking forward to following your progress.

So anyway, in a subsequent email Ms. Prudence asked if I would like to guest post about our journey. I told her I wasn’t ready yet, but when I was, I would tell my story here, on her wonderful blog.

When I first started checking out blogs, I was looking for frugal advice. I can’t remember what the initial search was for, but I believe I was looking for extreme ways to save money. I love extreme stuff. I think it’s fun to see how far people can challenge themselves and if I can pick up even one new trick from it, I’m a happy camper indeed.

Then I got hooked on PF (personal finance) blogs. It all started with Sam’s site, frugaling.org. Loved it! He’s very socially conscious and he had great frugal tips.

Slowly I began commenting. I’d never done that before and got hooked. Then I started checking out other PF blogs, and eventually started my own, frugalvoices.com. After a few months, I decided to change the name. I felt like I really didn’t have enough to say financially, so I changed the name to lifestylevoices.com so that I could spend more time on minimalism and other lifestyle subjects, such as, eventually, vandwelling, all while still enjoying the frugal stuff.

I discovered along the way that a LOT of PF blogs were about debt reduction and wealth building. Serious stuff. Intense stuff. I was totally out of my element. And here’s why.

Jay and I have no debt. No debt whatsoever. Especially now. We recently sold our home, moved to Florida, and we’re now renting a home. We don’t have a car note, no loans, no credit cards, nope, no debt at all.

But it’s not through the intense means so many PF bloggers employ.

You see, back in ’89, we went bankrupt. Jay was in business for himself and had gotten screwed over by an unscrupulous heating company that he was subcontracting to. We ended up over $30,000 in business debt. I know that doesn’t sound like much to a lot of people, especially ones with student loan debt, but to us, it was insurmountable. We had a 4 year old, I was having health problems that were causing a lot of debt, and we were advised by an attorney that bankruptcy was our only option. We had no clue. We weren’t happy about it, but we took his advice. We gave up our home and moved into an apartment in the city. My health improved after about a year and we were back on track financially. Kind of. We were living paycheck to paycheck, but paid everything with cash for the next 7 years.

THEN, we started getting credit card solicitations.

We had been living so tightly for those 7 years, but we didn’t want to get into trouble again. However, slowly but surely, we applied for a card, and got it!

For the next 9 years, we used credit cards and made minimum payments. We didn’t know any better. We thought we’d learned from the bankruptcy, but apparently not. So in 2004, after never missing a payment, credit card companies started doubling and sometimes tripling minimum payments on cards, even though people weren’t late. We were caught up in the crunch. We had barely been able to make the minimum payments as they were. We were totally unable to make doubles and triples. Jay was once again working for himself, but the work had dried up big time. It was like the world had collectively closed its wallets and started making impossible demands. We went to the local credit counseling service (over $30,00 in debt once again) and after carefully going over our situation he recommended, yep, you guessed it, that we go bankrupt again. That was totally unexpected, but at this point we were so far behind and the companies wouldn’t work with us at all. They just wanted payments in full. There’s a joke for you. Let’s see, I can’t afford to pay you AND the other companies the minimum payments, but I’ll come up with the $7,000 I owe you by Friday.

Yeah, that’s how it went.

There is so much stigma attached to bankruptcy. No one wants to talk about it. Especially with people who are working their a$$es off trying to get out of debt. I can only say that in 2005, we went through our second bankruptcy because we just had no clue how not to. After reading these wonderful PF blogs over the past year, I can see how we could have done it differently both times. But hindsight is 20/20 for sure.

Having said that, I always want to say to people who are in WAY over their heads, that if you HAVE to go bankrupt, it isn’t as horrible as it sounds. Yes, it does take 7 – 10 years to get credit again, but the stress that is lifted off you may be worth it. I can tell you this, we will never (please God) have credit cards or loans ever again and we learned how to SAVE money and stop living paycheck to paycheck. We have paid cash for the past 10 years and we have a totally blank credit report. It looks like we’re aliens that just landed on this planet, but not only have we learned our lessons from those experiences, we’ve learned even more from the PF blogs and the brave souls who are digging their way out of extreme debt.

My only advice, if I’m even qualified to give any, is to do what you need to do. When companies or celebrities go bankrupt (think Donald Trump), no one bats an eye. But let Uncle Charlie do it, and it’s a scandal! Don’t let other people’s judgments keep you from doing what you need to do. It’s your life, and you and your family’s happiness and peace of mind are all that’s important. No one knows all of the intricacies of your situation but you. The guy in the house, cubicle, or car next to you has no say in your finances.

Unless, of course, you owe him money …

Have you ever “come out of the closet”? It’s a scary move! But no “tar and feathers” allowed here. Your comments are welcome.

prudencedebtfree

Kay, thank you so much for sharing your story. You certainly aren’t alone in this era of record levels of personal debt and bankruptcy, but there’s so much shame, and such a taboo against talking about it all. A taboo that you’re busting! I wish you and Jay very well in steering a new course. I believe the future has great things in store for you both : )

Thank YOU so much, Dear Prudence, for hosting me. It feels like home over here on your site! Safe, warm, comfortable, and accepting. Your site is awesome and so are you! Come guest over at my place, ANY time, about ANY thing your heart desires. 😀

thank you for sharing your story Kay! I think it’s safe to say, those in glass houses shouldn’t throw stones, meaning everyone has made (financial) mistakes and we are human and live and learn…sometimes having to learn the hard way twice. I’m really happy things are great now and I’m really glad you kept your blog going! I find it refreshing! 🙂

Oh man, I think there is no shame in the PF blogosphere — we’ve all made some dumb moves, which is, like, why we’re here. (OK, I guess there are also some people who’ve never made a dumb move and blog about becoming zillionaires, but I can’t really relate to those folks so I don’t read them.) You actually sound like you’ve been pretty sensible overall; I don’t know if it’s Dave Ramsey or what, but people seem to try to avoid going bankrupt even when it’s really the best choice for them. You can’t do it with student debt and I think a lot of folks have the majority of their debt in that. But if I were in tens of thousands of debt I couldn’t really see how to pay off (especially if it’s bad business debt or medical debt) I’d go bankrupt in a second rather than empty my retirement accounts to pay it off.

Thank you so much C! I appreciate your support. I feel the same way. Some people really do suffer because they are afraid of what family or friends will think. It’s kind of like soldiers who are afraid to admit they have PTSD. 🙁

Wow. This was so intimate and personal. Thank you so much for sharing with us, Kay. We’ve definitely all made mistakes, and it’s wonderful to have each other to learn from while we navigate our own paths. I am so, so happy you’ve kept your blog up, and I love reading about your adventures. I feel like I can definitely relate to your attitude toward life, and knowing more about your back story only makes me a bigger fan! Thanks again 🙂

Kay, I like your comment about Uncle Charlie, because it’s so true. I also think this is going to touch more than a few people reading this because pretty much no one talks about bankruptcy in the PF blogosphere, so I’m glad that you ARE talking about it. Kudos to you for that.

It’s so weird, but I actually DO have an uncle who went bankrupt numerous times. He was always getting into one business or another, but could never quite make them work. I especially loved his restaurant, but he kept giving everyone free meals! Sweet man, but seriously Uncle Pasquale!!! 😛

Thanks for the support, Robin. I think I’ve known you the longest on here! You are a true friend! 🙂

I had a friend declare bankruptcy. She’s awesome with money, but her ex wasn’t. Seven years and it was off her report. She now owns again and life is good. That is interesting that no one talks about bankruptcy in the PF world. My guess, at least with the millenials among us, is that it’s because a majority of the debt is student loans and most of the time unforgivable?

Thanks Ms. Femme! I totally agree. The student loan thing is a butt kicker. If someone is in serious debt and they have student loans, they can at least bankrupt the other stuff if necessary. I am seriously not trying to advocate bankruptcy, but I am trying to take the shame out of it. Everyone just keep repeating “Donald Trump Donald Trump Donald Trump”!

And, of course, there are so many other celebrities and businesses too. What’s okay for the 1% should be good for the 99% too.

Kay, thank you for being so brave and making yourself so vulnerable here. It sounds like you’ve learned a lot from your mistakes and worked hard to get your finances on track. There should be no shame here Kay.

Your comment about hindsight being 20/20 hit me. You said that after reading so many PF blogs that now you can see how you could have done things differently. It sounds like bankruptcy was the best option for you though.

Thanks for the word hugs, Emily! 🙂 The PF blogging community has been such a learning experience. It’s blogs like yours that help people not only out of financial trouble, but also helps them to not get into financial trouble in the first place. That should make you sleep well at night. I really mean that! 🙂

Thank you so much for sharing your story Kay! It is absolutely nothing to be ashamed of, and by sharing your story now, you are helping others who might currently be going through what you did.

No one is perfect; everyone has made financial mistakes at one point or other. It’s what makes us human! And also what makes PF blogs so useful, because you don’t know what you don’t know. I’ve found myself learning so much in general through blogs, what a gift! 🙂

It’s really inspiring to see how the PF community can make such a big influence. Thank you for your story — going bankrupt twice and then being able to stay inspired through the PF community is so powerful. I’m sure if it wasn’t for blogging and all of the other sites I read, I wouldn’t be tackling my debt as hard as I am today, 4 years down the road. I probably would have resorted to buying more useless junk and reverting to paying minimums on my debts long ago!

I think a lot of people hide the details of their mistakes. In doing so, others don’t see the whole story and think that they’re so much worse off. It can make things intimidating for sure, again thanks for sharing!

Kay – it seems like part of your story is the combination of bad luck/lack of knowledge. In our case, we certainly lacked knowledge and made a bunch of bad decisions, but luck was on our side and neither of us lost a job, suffered any health issues, etc. We were able to get back on our feet and pay off all our debt – but I know looking back that if even ONE thing had gone wrong, we would certainly have lost our (underwater) house, etc. and declared bankruptcy as well.

I think it is easy for people who got lucky to chalk it up to their just being awesome, and for others who perhaps made the same decisions and it ended badly to chalk up to their stupidity, etc. This is so prevalent we actually have a name for it in psychology: it’s called Attribution Bias. Basically it’s when we blame another person’s character flaws for their problems, and we blame external factors when the same thing happens to us!

We are a narcissistic species indeed! Thank you for laying it out so clearly. I’m going to be thinking about that for quite a while and noticing whenever I find myself thinking that way. A quick course correct will definitely be in order. Great comment! 🙂

Oh wow Kay, I’ll be honest and say I didn’t see this one coming! You strike me as someone who has frugality dialed! (Not that frugality can save one… you just come across as an extremely focused, on the ball money manager.)
I hope you continue to find the PF community welcoming 🙂 For the most part, it’s pretty amazing!

Thank you Kay for sharing your story! No tar and feather here I promise! I went bankrupt in 2008 shortly before getting married to my husband. I still brought debt into the marriage and that was $12,000 of Student Loans.

Together we are working on paying off our debt although very slowly as we are living on a single income. I do what I can from home and he works the over time he can to help.

Thanks again for sharing your inspiring story! And it’s just that….inspiring! :o)

Tennille! I do remember you doing a post on this subject some months ago! I remember thinking how much we have in common in so many ways. Thanks for the reminder and the kind words AND you know how much I love your website. You actually put money in my pockets with your suggestions. I am SUCH a fan! 🙂

Thank you so much for sharing your story Kay! No tar and feathers here 🙂 I’d say everyone is constantly learning no matter what they experience. Personal finance is about your personal experience with money and it’s so interesting to read these blogs because no two experiences are alike, and with that being said no one experience is better than another. We can all learn a great deal from each other without being judgmental because we’re all far from perfect.

Thanks for sharing. You are right – bankruptcy is not talked about much in the PF world which is strange because according to my google search nearly 1 million bankruptcies last year in US. If my numbers are right then that is about 1 in every 318 people. Interesting. I personally know 2 people that have declared and they are doing just fine.

That math was awesome! And surprising. And disturbing! Wow. I would have never thought of it that way. Especially considering how much of our population are children. Makes the odds even more crazy. Thanks for putting it in perspective like that May! 🙂

Aw, thanks Laurie! I hope my story helps people whose boat is sinking realize that life preservers come in all shapes and sizes. I once knew a guy who had to wear a life vest with built in boobs because all the others were taken. Hey, if he could get through that, we can all get through some financial snafus! 🙂

One of the key takeaways with bankruptcy is that most people who do it once, will do it twice. Unfortunately, you weren’t an exception to that statistic. And the key issue, I think, is that money problems are very often just symptoms of emotional and psychological habits we’re not even aware of…or if we are, we’re resistant to changing them. So if you are used to living paycheck to paycheck or you’re used to being in debt, you will probably keep doing that, because it’s your habit and it seems normal. It’s your psychological comfort zone.